Shradha
Agarwal and Rishi Shah are co-founders of ContextMedia, a health care media
company in Chicago. They made a point of financing and mentoring other
start-ups. Whitten Sabbatini for The New York Times
When start-ups begin their sojourn, it’s akin to Joseph Campbell’s mythical
hero’s journey. Instead of battling hydras and gorgons alone, entrepreneurs
often help each other face obstacles like entrenched markets, financing and
abject fear of failure.
It is a symbiotic relationship that makes sense to Shradha Agarwal and Rishi
Shah, both 31 and co-founders of ContextMedia,
a health care media company in Chicago. The two entrepreneurs are expanding
their 10-year-old company, which they started when they were students at
Northwestern University. They have made a point of supporting other start-ups
by financing an angel fund called Jumpstart Ventures. The fund has backed more
than 45 businesses, giving $20 million since 2011.
Although there are no precise estimates on how many such ecosystems exist,
the Kauffman Foundation, a research organization focusing on entrepreneurship,
found that nearly every one of the more than 360 major metropolitan areas in
the United States had such a network in place.
ContextMedia provides customized health care information on screens at
doctors’ offices and other sites. Doctors can show patients digital 3-D
anatomical diagrams of procedures using ContextMedia “wallboards” or tablets.
Their material is now viewed by more than six million patients a month at
25,000 medical practices or health care locations.
The company is also working with the Mayo Clinic to bring their media
content directly to hospitals and physician offices.
More than 400 people work at the company, whose revenue last year was $63.5
million. It hopes to add more than 200 workers by the end of the year.
Although ContextMedia has made inroads into a notoriously difficult market
to crack — doctors’ waiting and examination rooms — it was done without venture
capitalists, who weren’t willing to take a risk, Ms. Agarwal said. Support from
the Chicago entrepreneurial community not only got her company started, but it
also helped the company clear some high hurdles.
Professors at Northwestern first helped Mr. Shah and Ms. Agarwal. And the
founders “bootstrapped,” or self-funded, their enterprise during the recession.
“In 2008-2009, we slowed down,” Ms. Agarwal said, “so we had to reconnect to
our journey, which was our passion for changing health care.” With the
Jumpstart fund, she says she now wants to “pay it forward” to other
entrepreneurs.
These support systems need to be diverse to be effective, though. According
to the World Economic Forum, which surveyed more than a thousand
entrepreneurs around the world, what start-ups value most are accessible
markets, funding, regulatory framework, an educated work force and major
universities. That doesn’t mean, however, that the network always provides
robust financial backing from big-money players like large venture capital
firms.
An ecosystem also offers social and psychological support. What fuels
entrepreneurial success, Ms. Agarwal noted, are passion and purpose. When she
started her company, she wanted an enterprise that would have a positive social
and personal impact. She started with diabetes
education, a disease that affected both her and Mr. Shah’s relatives in India.
When Ms. Agarwal interviews candidates for the Jumpstart Ventures portfolio,
she wants to find like-minded people who are “passionate about their mission.”
Mert Iseri, co-founder and chief executive of SwipeSense, a company focused
on reducing hospital infections, was someone who fit the bill. Also a former
Northwestern student, he met Ms. Agarwal in 2012.
Mr. Iseri, 28, was focused on providing a
digital
hand hygiene solution to combat the 100,000 annual deaths in the United
States from hospital-acquired infections. Such infections cost $28 billion a
year in related health care expenses.
“Shradha became our first investor and gave us our first check for $25,000
and employed ‘radical candor,’” in her mentoring, Mr. Iseri said. That included
discussions about tough decisions that had to be made when building a business,
such as hiring, firing and determining long-term goals.
“It is always difficult to fire someone,” Mr. Iseri said. He described one
situation where a sales representative was a high performer but didn’t fit the
culture at SwipeSense. “Shradha was very clear; her direct feedback was to part
ways right then and there, and she highlighted that no amount of short-term
results can justify holding on to folks who won’t be long-term members of the
team.”
SwipeSense’s initial presentation at Healthbox, a Chicago-based incubator,
raised $1 million in 2011 after one of its first demonstrations. Mr. Iseri
credited Ms. Agarwal’s continuing support with helping his company secure
more than $12 million through several rounds of financing.
Mr. Iseri would not disclose his company’s sales but said it had “annual
revenues in the seven figures” and was “experiencing significant
month-over-month growth” with its customers.
Ms. Agarwal, her employees, co-investors and angel investors have also
bolstered entrepreneurs by simply being nearby and giving direct guidance.
For instance, ContextMedia provided office space to Packback, which offers online
learning communities and digital textbooks for college students. Ms.
Agarwal and ContextMedia employees often interacted with the firm’s workers to
offer advice.
“We’ve been in seven office spaces since we were founded four years ago,”
said Jessica Tenuta, a co-founder and head of design of Packback. “Shradha
showed us how to hire and incorporate our values while mentoring us. We made
great connections while being in their space.”
Packback now has 24 employees and a $250,000 investment from Mark Cuban, who
took a 20 percent stake in the company after the co-founders presented on
the reality show “Shark Tank” two years ago.
Ms. Tenuta and Packback’s co-founders — Kasey Gandham, Nick Currier and Mike
Shannon — have also garnered support in other ways. The company works with
1871, a business incubator in Chicago that offers classes, co-working spaces
and access to venture capitalists.
Ms. Tenuta did not disclose her company’s sales revenue but said the firm
expects to have 30,000 students using Packback in the 2016-17 school year, up
from 10,000 students in the previous year.
For their part, Mr. Iseri and Ms. Tenuta were inspired by their experiences
to mentor other start-ups. These may be at university-based or private
incubators and accelerators, in co-working environments or through other angel
investors and venture capitalists.
Ms. Agarwal characterized the payoff as “the communal support through
learning, wellness and volunteer opportunities.”
She added that her enterprise and those she backs have “a bias toward action
and scaling to the market.” That means an entrepreneur’s vision must eventually
translate into revenues, profit, growth and a commitment to giving back to the
community and other entrepreneurs.
The network of support offered by start-up ecosystems, though, won’t get
entrepreneurs entirely past the fear of failure and rejection. A plunge into
the unknown is part of making it past those perilous first years.
“When I was a girl, my mother pushed me into the deep end of a pool to get
me to swim,” recalled Ms. Agarwal, who grew up in India. “She said it was the
only way to learn. She was one of four daughters in her family, all of whom
were pushed to earn college degrees by my grandmother.”
If Ms. Agarwal and her peers succeed, their companies will also contribute
to social good such as better medical education and improved health outcomes.
They will, in her words, be “solving problems worth solving.”
The Mark Cuban Effect: How a Vocal Billionaire Is Betting on Higher Ed’s Disruption
By Goldie Blumenstyk MAY 03, 2016
Frederic J. Brown/AFP/Getty Images
Mark Cuban, the celebrity businessman, has some definite views about the state of higher education: "When I see something that is wrong and fixable, I have no problem speaking up about it."
Mark Cuban is known for mouthing off. Typically it’s from courtside at a Dallas Mavericks basketball game (he owns the NBA team), from a leather armchair on the set of the hit ABC show Shark Tank(he’s a regular), or from the op-ed pages of the business press (where he often rails against the U.S. Securities and Exchange Commission).
His natural milieu isn’t a wonky Twitter debate about education policy. But on a recent Saturday night, when you’d think one of the country’s best-known billionaires might have more entertaining ways to spend his time, Mr. Cuban spent an hour on social media spouting his education views while sparring with Sara Goldrick-Rab, a sociology professor who advocates for free community college.
Mr. Cuban’s comments included a critique of accreditation, a call to eliminate the tax-deductibility of donations for college buildings, pleas for greater use of open-source textbooks as a way to save students "real money," and some tough love for students who hadn’t learned to make good financial choices.
At one point, he even tangled with Ms. Goldrick-Rab over her research findings on the growing number of students struggling with food and housing insecurity. "Every kid that eats ramen noodles has food insecurity," Mr. Cuban retorted.
"You could’ve knocked me over," Ms. Goldrick-Rab said later, of the exchange. The two had met two years earlier, when they were both on a conference panel in Arizona. They disagreed about a lot back then, too, but at heart, she’s a fan. Ms. Goldrick-Rab, who will soon take a post at Temple University, appreciates that a business personality like Mr. Cuban is "intellectually engaged" on those issues. "I would like to see more people like him feeling free to ask more questions and just jump in," she says.
Of course, Mr. Cuban does have a stake in the future of education. He’s an investor in at least four start-up companies focused on higher education. And he’s been a vocal critic of what he calls the "ridiculous" spending by colleges on administrative salaries and glitzy campus facilities, and the "easy money" of student loans. The education business, he says, "is a mess."
Being an ed-tech investor doesn’t make someone an expert on college. And that’s certainly not a label Mr. Cuban, 57, has tried to claim for himself.
“I would like to see more people like him feeling free to ask more questions and just jump in.”
But the business titan and onetime Dancing With the Stars contestant has become a valued mentor to a select group of education entrepreneurs and at least one college leader. For better or worse, he is also a visible and often-provocative voice for shaking up the higher-education status quo, a stature that may have as much to do with the tone of the times as with the merits of Mr. Cuban’s ideas. These days it seems just about anyone with a fat wallet feels entitled to play higher-education critic.
Mr. Cuban shared his views on education in a series of email exchanges with The Chronicle last month. His comments in this article are also drawn from an interview with this reporter two years ago, as well as his public remarks from the panel with Ms. Goldrick-Rab and other sources.
"When I see something that is wrong and fixable," says Mr. Cuban, "I have no problem speaking up about it."
A Search for ‘Pain Points’
It’s in his role as an investor that Mr. Cuban is most hands-on with education issues.
His investment philosophy is simple. He says he looks for "pain points" in industries — students’ aversion to high-priced textbooks, for example, or the anxieties about the value of a traditional college degree — and puts his money into companies that are trying to fix them.
He has stakes in four young companies: Copley Systems, which tracks students’ academic activities with a data system that helps colleges keep them on track to graduate; Degreed, which provides a digital platform for people to showcase a variety of educational credentials; Packback, which began by selling short-term rentals of digital textbooks but is now shifting to offer online communities for students and professors who use the same books; and Ranku, which helps colleges create more-effective systems for finding and enrolling online students.
Mark Cuban on What Ails Higher Education
Mark Cuban has strong ideas on what’s wrong with higher education. Among the key issues, as he sees it, are:
• Student debt: Mr. Cuban owns the websitecollegedebt.com, which maintains a running total of cumulative student debt. The tally now surpasses $1.4 trillion, nearly twice as much as car loans, according to the site, and he says the student-debt burden is a serious problem for the entire country. He argues that students who take on too much debt are part of the problem, too. Eventually employers will look down on such students, he predicts: "It’s going to be the equivalent of putting a drunk picture on Facebook."
• Wasteful spending: He argues that the availability of student-loan money fuels wasteful spending by colleges. "Easy money has led to colleges’ spending money on ridiculous ‘drive-up appeal’ features for their universities, which in turn increase tuition prices," he says. All of those stadiums, food courts, and fitness centers, he says, are just assets that depreciate in value and require continuous spending for upkeep. "They become boat anchors," he adds.
• Academic labor: He has criticized colleges’ overreliance on adjunct instructors, likening the practice of paying instructors low wages while charging students full price as "arbitrage."
Mr. Cuban was one of the first outside investors in Copley. Keith Clougherty, a software developer and a founder of the company, has known Mr. Cuban since the mid-1990s, when they would run into each other at e-commerce trade shows and occasionally catch up using AOL Chat. In 2013, 18 months after starting his company, Mr. Clougherty wrote to Mr. Cuban, seeking a small investment. "Within two minutes he pinged me back," says Mr. Clougherty. He declines to specify the size of the investment but says it was less than $1 million.
Especially in the early days, having Mr. Cuban as an investor was a big plus. With thousands of ed-tech companies out there, "his brand and his dollars helped us break through," says Mr. Clougherty. Mr. Cuban’s willingness to lend his celebrity to the companies he backs, as with his participation at that panel in Arizona, during the 2014 ASU GSV Summit, certainly helped too.
Today Copley says its software is in use on 50 campuses and involves about 250,000 students.
If there’s any downside to having a brash businessman like Mr. Cuban as an investor when selling to the higher-education market, the founders of his four companies in the market say they haven’t encountered it. "It either goes unnoticed" or it’s a plus, says Michael Shannon, who landed a $250,000 investment from Mr. Cuban after he and his Packback co-founders appeared on Shark Tank in 2014 to pitch their company. Mr. Cuban is one of the show’s original "sharks" — the investors who grill entrepreneurs about their pitches and decide on the spot how much they’ll invest for a share of the company. Whenever Mr. Shannon speaks to professors and others on campuses, he finds "it’s incredible how popular the show is."
Kim Taylor, a founder of Seattle-based Ranku, says Mr. Cuban’s involvement made it easier to attract additional venture-capital investors. "There’s a thing about Mark that others like to follow," she says. But his popularity goes beyond the VC crowd. "My grandmother knows who he is."
Mr. Cuban is more than a figurehead for those education ventures. He typically demands weekly updates, and, while he doesn’t take seats on boards of directors, he communicates frequently with the founders via text message and Cyber Dust, an app whose messages disappear. (He created Cyber Dust after the SEC used his private text messages in a failed insider-trading case against him.)
"He’s our most-involved investor," says Ms. Taylor, who became acquainted with Mr. Cuban through friends whose companies he had invested in. When she began her company, he heard about it somehow — "he reads everything," she says — and connected with her via Facebook. He was the first one in on the company’s initial $1-million round of investment after talking with her casually one afternoon in New York City. "There wasn’t a slide deck," she says of her nontraditional pitch to him. "We were in a bar."
The ‘Megaphone’ of Celebrity
David Blake, chief executive of Degreed, says he sought an investment from Mr. Cuban after admiring the mogul’s posts on Blog Maverick. He emailed him out of the blue, and after a few exchanges of emails and a few weeks, Mr. Cuban became one of nine investors in a $1.8-million seed round. The company, which goes by the slogan "the future doesn’t care how you became an expert," has since raised an additional $28 million.
Mr. Cuban has opened doors for the company as it has begun seeking corporate partnerships, going so far at one point to write personally to a chief executive and chief technology officer at a Fortune 20 company he knew to tell them, "here’s why I invested, and here’s what I love about them," says Mr. Blake. "There was quickly a fire lit there," he says, and Degreed got a meeting. The company reports it now has about 100 corporate clients, 115 employees, and more than one million users.
Mr. Cuban does more than make introductions. He has advised Mr. Clougherty to be bolder and to "stick your chest out a little more," the Copley co-founder says. And when Ms. Taylor confided to him once about a "gentleman client" who was being "unreasonable and rude," she says the advice he gave her about the importance of keeping a client happy helped her work toward a resolution. (He also reminded her that "karma’s a bitch," so she shouldn’t let an annoying client get under her skin.)
Despite all of his far-flung interests — Mr. Cuban’s website shows his investments in some 100 companies, including substantially larger ventures like the Landmark Theatres chain — colleagues of his note that he manages to be generous with his time in dealing with young entrepreneurs.
"The good thing about him is he’s more patient than you would ever imagine," especially if you know about Mr. Cuban only from watching him during a Mavericks game, says Howard A. Tullman, who runs a start-up incubator in Chicago called 1871 and says he has known Mr. Cuban since "before he was rich." (That would be prior to 1999, when Mr. Cuban sold his company Broadcast.com to Yahoo for $5.7 billion.) Both men are investors in Packback.
While Mr. Cuban may not be steeped in the nuances of higher-education policy, says Mr. Tullman, it’s not like "having a Kardashian endorse an education company." That Mr. Cuban is willing to use the "megaphone" of his celebrity doesn’t trouble him in the least. "If he said consistently no one should ever go to college again," says Mr. Tullman, "that would be a problem."
When people have 'particular interests in particular outcomes based on their investment portfolio, we have to be wary.'
But the outsize megaphone that a billionaire can command can sometimes be dangerous, warns Audrey Watters, a writer who follows the education-technology scene. People like Mr. Cuban or Peter Thiel, another billionaire who’s famous for deriding colleges, are sometimes "given credence when they don’t really have a clue." Ms. Watters says their critique of colleges exemplifies a current "Silicon Valley narrative that education institutions stand in the way of the future."
She understands the appeal of their argument. "Clearly higher ed is facing a lot of challenges," notes Ms. Watters. But when people have "particular interests in particular outcomes based on their investment portfolio, we have to be wary," she argues. For them, "the fix is going to be a product" rather than, say, more public funding for colleges. "They aren’t necessarily white knights."
‘The Ultimate Accreditor’
Mr. Cuban, for his part, says it’s important to call out the higher-education system for its faults, which include college-marketing efforts that "reflect the same tactics that companies desperate to stay alive undertake," or accreditation, which he calls "too much of a cartel." It’s the employer who hired the graduate or the customer who buys the music student’s music that reflects the quality of education, he says. "That’s the ultimate accreditor."
Unlike some other entrepreneurs, Mr. Cuban hasn’t made noises about starting his own college. But he has some strong feelings about what such an institution might look like: For starters, he says, it would have a "fraction of the administration" of most institutions, few specialized buildings, a wide range of courses, including the liberal arts, and a variable tuition model, where the price of a course would be based on the size of the class, how much it was in demand, and the expertise of the instructor.
Such variable-priced courses "would allow students to inexpensively experiment with different classes until they determined what they wanted their major to be — or to take classes purely out of interest." He says any college he built would not include NCAA athletics.
Those ideas may seem simplistic to many traditional-college leaders, but the lower-the-price ideology that underpins them does resonate with some in academe. That includes Michael J. Sorrell, president of Paul Quinn College, a historically black institution in Mr. Cuban’s home city of Dallas where 84 percent of the students are needy enough to qualify for Pell Grants. Mr. Sorrell and Mr. Cuban befriended each other about two years ago, around the time Paul Quinn was developing a new work-college approach to lower its tuition.
Their conversations "about how you think about delivering education" helped to form its revised strategy, says Mr. Sorrell. And when Paul Quinn announced its new New Urban College Model, in early 2015, the news release noted that Mr. Cuban would be developing an open-source course on entrepreneurship for the college that would be made available to other institutions.
"I don’t even have a word for it," says Mr. Sorrell, of Paul Quinn’s relationship with Mr. Cuban.
As for Mr. Cuban’s relationship with his own alma mater, those ties are hard to characterize, too. He and Indiana University at Bloomington’s president, Michael A. McRobbie, haven’t had any deep heart-to-hearts about the state of higher education, a university spokesman says. But Mr. Cuban did agree to appear in a cheeky commercial for the university that features an actor who’s a look-alike for a young Mark Cuban.
He has also donated to the institution, but not in any extravagant way. His most recent gift was for $5 million, in June 2015, for a new video and broadcasting center that will include technology for making broadcasts in 3-D and virtual reality.
And even with his philanthropy, he remains true to his critique. He says his money comes with a stipulation: It can’t be used for buildings.
Goldie Blumenstyk writes about the intersection of business and higher education. Check out www.goldieblumenstyk.com for information on her new book about the higher-education crisis; follow her on Twitter @GoldieStandard; or email her atgoldie@chronicle.com.
You don't need to be a math major to know that spending $5 for a college textbook is less than spending $45 and way less than spending $187. In this story problem, the prices are real. A new edition of “Professional Feature Writing” by Bruce Garrison goes for $187 on Amazon.com, while the cheapest used copy is listed at $45. That bargain-basement $5 version? It's a 24-hour e-book rental from Chicago startup Packback Inc.
A limited-time-only e-book isn't the same, of course, as an old-fashioned textbook. But for students who don't crack open their books until just before an exam, it's all they probably need. A growing number of investors and publishers seem to agree.
Packback, conceived when its founders still were undergraduates at Illinois State University and launched in spring 2013, has attracted 80,000 users and $1 million in venture capital from, among others, celebrity entrepreneur Mark Cuban. The site lists 3,200 textbooks from big-name publishers such as McGraw-Hill Education, up from just 21 titles at the beginning of the 2013-14 school year.
Co-founder and CEO Mike Shannon hopes that within 18 months Packback will build “full catalogs” of digital textbooks — which means many students would be able to rent most of their assigned readings via its site.
Textbooks these days “are often more of a reference point,” says Mr. Shannon, 24, a rapper and 2012 finance and economics grad whose previous job was ball boy for the Chicago Bulls. Yet “prices are continuing to rise, so students are looking for alternatives.”
LEARNING FROM THE PROS
That argument won over Mr. Cuban, who invested $250,000 after Mr. Shannon and co-founder and Chief Operating Officer Kasey Grandham pitched him on ABC reality show “Shark Tank” last spring. Since then, locals including 1871 CEO Howard Tullman and ContextMedia Inc. co-founder Shradha Agarwal also have invested in Packback.
Mr. Shannon still checks in weekly with Mr. Cuban. He might see Ms. Agarwal daily. That's because Packback's eight employees work in a corner of ContextMedia's River North headquarters that is devoted to startups.
Ms. Agarwal says she appreciates the team's practicality. Instead of focusing on technology and ignoring the challenges that face even e-book publishers, she says, Mr. Shannon “is very aware of the reality on the ground and working on what Packback needs to do to get students onto their platform and get publishers on board.”
To that end, Messrs. Shannon and Grandham (a 2013 marketing grad) and co-founder and design chief Jessica Tenuta (a 2013 graphic design grad) have signed up 200 student ambassadors on 80 campuses; they're paid commissions on sales.
They'll need a bigger army to beat rivals CourseSmart from Vital Source Technologies Inc. of Raleigh, North Carolina; Chegg Inc. of Santa Clara, California; and Seattle-based Amazon.com Inc. Also, the startup, which won't disclose revenue, is not profitable.
Packback has a something the others don't, however: Mr. Cuban's endorsement. Since he backed Packback, the company has received 1,800 applications from students looking to represent the company on campus.
Why more students will be able to make procrastinating pay
Chicago-based Packback, a pay-as-you-go digital textbook rental service, has closed on a $1 million seed round of funding to build out its technology platform and expand to more college campuses nationwide.
The company, at 330 N. Wabash, expects to hire two more software developers by year’s end, bringing the workforce to nine, co-founder Mike Shannon said.
The startup lets students see the best prices for buying and selling textbooks and lets students download e-textbooks for $3 to $5 each, and use them for as little as 24 hours. Its patent-pending software platform prevents users from copying the textbooks.
Packback will be working with at least seven textbook publishers this fall, including three of the so-called Big Five publishers, Shannon said, declining to name them.
Long-term, the company wants to introduce publishers’ next-generation products by pinpointing where a student is getting stuck in a textbook and in real time linking the student to online learning resources, Shannon said.
The platform has grown from a pilot launch one year ago at Illinois State University, the founders’ alma mater, to 24,000 users on more than 100 campuses.
Packback’s value to publishers is bringing in revenue in an industry that costs publishers big-time.
The company, working with Chicago market research firm Shapiro & Associates, showed that its student users would have otherwise bought a used book or nothing at all if the students hadn’t used Packback. So Packback accomplished a 58 percent increase in publishers’ revenues during the 2013-14 school year during its pilot rollout at Illinois State University.
Packback pays a commission to 150 “ambassadors” — college students who market the service to their peers. The company aims to grow to 200 ambassadors by the fall semester.
“We’ve had 1,200 applications for ambassadors in the past two months, so we hope to eventually grow to more than 250 ambassadors by the end of the (calendar 2014) year,” Shannon said.
Packback’s most notable investment came in September 2013, when Shannon and co-founder Kasey Gandham touted the company on ABC-TV’s “Shark Tank” investment show.
They came away with a $250,000 deal from panelist Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team and HDNet high-definition TV network.
The remaining $650,000 comes from 20 other investors, including Howard Tullman, who runs venture capital fund G2T3V LLC and is CEO of the 1871 technology hub in the Merchandise Mart; Mark Achler, founder of Chicago-based Math Venture Partners and a former Redbox executive; Alan Matthew, founder of Tribal Ventures and one of Chicago’s most active angel investors; Mark Tebbe, founder of tech consultancy Lante Corporation, co-founder of Answers Corp. and operating executive director at Chicago private equity fund Lake Capital; and Rishi Shah, co-founder of Context Media and JumpStart Ventures.
Though Packback competes in the fiercely price-conscious arena of used textbook resellers, Shannon believes the company can change students’ reselling habits over the long term and, ultimately, keep textbook costs down because publishers won’t lose so much money on them. Now, publishers lose $5.5 billion each year in the $8.2 billion textbook industry because of used-textbook resellers undercutting industry-standard pricing.
Indeed, Packback’s name reflects its mission, Shannon said.
“Instead of books being a weight on students’ backs, we want to keep the weight in the students’ pockets,” he said.
Packback, the Chicago-based platform for renting e-textbooks on demand, on Tuesday announced a $1 million seed round from a group of more than 20 angel investors. The total includes a $250,000 investment the company earned from “Shark Tank” star and investor Mark Cuban when co-founders Mike Shannon and Kasey Gandham appeared on the show in March.
Shannon and Gandham founded Packback while students at Illinois State University in 2012. Early on, they reached out to Chicago entrepreneurs and investors they admired for advice — a strategy that finally paid off.
“It was really a relationship-developing process,” Shannon said. “Our advisors evolved into investors.”
Shannon said the team originally set out to raise $750,000 but, seeing more interested investors, raised more. Investors include 1871 CEO Howard Tullman, Math Venture Partners managing director Mark Achler and University of Chicago Booth professor of entrepreneurship Mark Tebbe.
The funding has enabled Packback to build out its team, putting particular emphasis on development. That includes the hiring of Steven Maguire as head of engineering. Maguire came from TrainSignal, which PluralSight recently acquired for more than $20 million.
The company said it will focus on building an “enriched” experience for students, which may involve analyzing reading behaviors and delivering supplementary publisher content within the Packback platform.
Packback now has seven full-time employees, plus six interns and part-timers working with the company this summer. To accommodate the growing team, Packback moved into ContextMedia’s new offices at 330 N. Wabash Ave. about a month ago. There, Shannon said, his team takes advantage of more open space while he and Gandham get access to ContextMedia’s executive team — CEO Rishi Shah, chief strategy officer Shradha Agarwal, CFO Jim Demas and COO Brad Purdy, all Packback investors.
“It’s a huge blessing for us,” Shannon said. “We can walk over to Rishi or Shradha and ask them, ‘Have you encountered a situation like this? How did you handle it?'"
The investment is also powering a beefed-up marketing effort that involves partnering with commission-based campus "ambassadors" at universities across the country. Shannon said he expects the program will have 200 ambassadors by the start of the coming school year. Packback now has a full-time employee overseeing the ambassador program.
Shannon said Packback has over 24,000 users at more than 100 U.S. campuses. Through seven publisher deals for the coming school year, he said, those users will have access to more than 3,000 digital textbook titles. Original partners McGraw Hill, Sage Publications and the Taylor and Francis Group are expanding their contracts, Shannon said.
On-demand e-textbook rentals remain Packback’s focus, but the platform now shows students where on the Web they can get the best deal on a given title — digital or not. Shannon said Packback earns affiliate commissions for the sales it drives to partner sites.
